TaxTMI 
TaxTMI 
2023 (7) TMI 1238
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.... Department Objection by the Department on additional grounds filed by the appellant in misc. application No. ST/MISC/85759/2022 ST/MISC/85306/ 2023 ST/86958/2017 Department ROM against Interim Order No. 6-7/2023 dated 11.04.2023 passed by CESTAT. ST/MISC/85758/ 2022 ST/86706/2019 Appellant Applications filed under Rule 10 of CESTAT (Procedure) Rules for consideration of the additional grounds ST/MISC/85303/ 2023 ST/86706/2019 Department ROM against Misc. Order No. M/85219-85220/2023 dated 06.04.2023 passed by CESTAT ST/MISC/85304/ 2023 ST/86706/2019 Department Objection by the Department on additional grounds filed by the appellant in misc. application No. ST/MISC/85758/2022 1.1 The miscellaneous applications No. ST/MISC/85758/2022 and ST/MISC/85759/2022 were taken up for hearing on 06.04.2023. The issue concerning consideration of additional grounds was heard at length by the Bench on 06.04.2023 in presence of both sides. However, at the conclusion of hearing, learned Special Counsel engaged by Revenue has specifically raised the points regarding change in the cause title filed by the applicants/appellants. Accordingly, the matter regarding considerat....
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....f additional grounds in the miscellaneous application Nos. ST/MISC/85304/2023 and ST/MISC/85305/ 2023 are without any basis or substance and accordingly are dismissed. 1.4 In view of above discussions, the miscellaneous applications filed by both the applicants/appellants and Revenue are disposed of and the appeals are taken up for hearing and for a decision on merits. 2. Before proceeding further on merits, we would like to record the following observations for appreciation by the authorities with regard to the judicial decorum and appropriate participation by Revenue officers in disposal of the appeals before the Tribunal. 2.1 During the course of hearing of appeals, the Commissioner of CGST and Central Excise, Aurangabad who desired long adjournment of the hearing and had been required, for the express purpose of justifying such action, to present himself and did so submitting that- (i) the Commissionerate had not been served with the miscellaneous application(s) filed by the appellant assessee; (ii) the department is preparing to file objections to the additional grounds, which were filed by the appellant assessee; (iii) change of special counsel han....
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.... of the above facts, when more specifically, in the impugned order dated 08.03.2019 at para 2.2.2 had specifically recorded that the noticee i.e., M/s Videocon D2H Limited is now merged into Dish TV India Limited. Thus, we fail to understand how the same Authority, though he is a different officer posted subsequently, can take a view contrary to the views expressed by his predecessor, even as he claims ignorance. 2.4 Thus, it is apparent that, in seeking unnecessary adjournments, without any reasonable or valid grounds by Revenue, there is ulterior motive and purpose in obstructing the very process of justice delivery by the Judicial forum. Therefore, the action on the part of the Commissioner of CGST and Central Excise, Aurangabad is highly inappropriate. 2.5 Further, we are also unable to understand the intent of the Commissioner of CGST and Central Excise, Aurangabad in his letter F. No. TC(P)97/2017 dated 06.04.2023, addressed to the Principal Commissioner (AR), CESTAT, Mumbai, in suggesting that the department's strategy is to refer the matter to the larger Bench. We are unable to appreciate the basis under which the Commissioner of CGST and Central Excise, Aurangabad can co....
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....premises on rental basis under an agreement, the jurisdictional Range Officer, had called for certain details and the same were submitted by the appellants under the cover of their letter dated 11.01.2011. The appellants were of the view that service tax was not payable, since they are paying VAT on the amount realized from the customers in lieu of set-top box charges or satellite box usage charges, claiming the same as 'deemed sale'. However, the department interpreted that in case of STBs, only the physical possession is with the customer, but the monitoring, sending and usage of signals are vested with the appellants and under their supervision, signals are being transmitted to the site of customers. Hence, the Department treated such modus operandi, as a case of transfer of right to use the STBs, without involving transfer of possession or effective control of the goods and thus, concluded that the transactions should be subjected to levy of service tax as an indispensable part of the broadcasting services. Accordingly, show cause proceedings were initiated by the department, which culminated into the impugned orders dated 27.12.2016 and 08.03.2019. In respect of the orde....
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....e STBs, the appellants had duly discharged the service tax liability on the charges claimed from the customers. 5.3 Learned Advocate has stated that STBs are to be regarded as movable goods namely, chattels supplied to the subscribers for their use in seeking the channels in the privacy of their homes, which they want to, and thus, the subscribers operate the STBs to view and also apply for various channels, movies on demands etc. Thus, he submitted that the levy of service tax on the services provided by the appellants can only be under the taxable category of 'Supply of Tangible Goods for Use' (STGU), without transferring the Right to Use, both prior to 2012 and thereafter. In this context, the learned Advocate has relied on the Circular Nos. 334/1/2008 - TRU, dated 29.02.2008 and 198/8/2016 S.T., dated 17.08.2016 issued by the Central Board of Excise & Customs (CBEC), to state that if VAT has been paid into the state exchequer, considering the nature of activity as deemed sale, then there is no question of levying service tax on the same activity, considering either as a service under the taxable category of 'Broadcasting Service' or 'STGU Service'. Further, learned Advocate ha....
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....n 65B (44) ibid, which excludes from its purview any transaction which amounts to sale under Article 366 (29A), i.e., 'deemed sale', under the Constitution of India. He also claimed that the set-top boxes and the consideration in the form of rental charges cannot be subsumed, as if it is a consideration for the broadcasting services, when the understanding between the subscribers and the Appellant is that the consideration of rental is for transfer of right to use of the set-top boxes. 5.6 In respect of the Appeal No.ST/86706/2019, learned Advocate submitted that VAT was being paid on the total rental amount received in a particular year and that the rental amounts were spread over seven years on a pro-rata basis. He further submitted that from 01.04.2015, no rentals were being collected and there were jural relationship of access charges on which service tax was paid by the appellants. He also submitted that the past rentals received by the appellants are being charged to the profit & loss account as income from 01.04.2015 onwards, from the pool of current liabilities of past years, in a pro-rated manner. However, he submitted that the learned adjudicating authority has discredit....
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....facts of the case. He states that STB is an indispensable part of broadcasting service provided by the appellant to its subscribers. The transaction is to provide service and not sell STBs and STBs are only used for providing the service and do not have a value of their own. The broadcasting Service provided by the appellant was liable to pay service tax both before 01.07.2012 and thereafter, upon introduction of the Negative list scheme. 6.3. Learned Special Counsel Shri C. Dhanasekaran, appearing on behalf of the Revenue has stated that the appellants cannot provide broadcasting services to their customers without STBs, as the signals are transmitted and displayed on the customer's television with the help of STBs; that the STB is an indispensable part of the broadcasting services provided by the appellants to their subscribers, and as such, are leviable to service tax. In support of his view point, he has placed reliance on the decision of the Tribunal in the case of UCN Cable Network Pvt. Ltd. Vs. Commissioner of C. Ex. & Customs., Nagpur 2016 (45) S.T.R. 565 (Tri.-Mumbai). He further relied upon the judgments of the Hon'ble Apex Court in Idea Mobile Communications Ltd.,....
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....me slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner;" (b) On plain reading of the above statutory provisions, we find that the services connected with 'broadcasting' can be categorized under these different groups: (i) programme selection, scheduling or presentation of sound or visual matter; (ii) activity of selling of time slots or obtaining sponsorships for broadcasting of any programme; (iii) permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals ....
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....ng services. It is also relevant to note that post - 2012, there is no separate specified head of broadcasting service, under which the learned adjudicating authority has classified supply of STBs as a part of such taxable service. Thus, we are of the considered view that supply of STBs, conferring the right to use the same by the subscriber, would not fall either under broadcasting service or under STGU for levy of service tax thereon. Rather, the activity of such supply, would more appropriately be considered as a deemed sale and recognizing such aspect, the appellants had rightly discharged the VAT liability thereon and also adoption of such modus operandi had been accepted all along by the jurisdictional VAT authorities, while finalizing the tax assessments. (f) For the period post-2012, the category of services hitherto defined under the erstwhile regime were merged under a common phrase i.e., 'service', which was brought into effect from 01.07.2012. Under the new provisions, known as Negative List regime, the phrase 'service' was defined in Section 66E (f) ibid, assigning the meaning of STGU services as 'transfer of goods by way of hiring, leasing, licensing or in any ....
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....er of the right. In other words, the right to use goods arises only on the transfer of such right to use goods. (g) The transfer of right is the sine qua non for the right to use any goods, and such transfer takes place when the contract is executed under which the right is vested in the lessee. (h) The agreement or the contract between the parties would determine the nature of the contract. Such agreement has to be read as a whole to determine the nature of the transaction. If the consensus ad idem as to the identity of the goods is shown the transaction is exigible to tax. (i) The locus of the deemed sale, by transfer of the right to use goods, is the place where the relevant right to use the goods is transferred. The place where the goods are situated or where the goods are delivered or used is not relevant." (g) Further, the phrase 'right to use the goods' and transfer of the same has also been dealt with by the Hon'ble High Court of Tripura, in the case Bharti Telemedia Ltd. and Ors. (supra), the relevant paragraph in the said judgement is extracted below: "29. One of the most important elements of determining whether the right to use goods has been transferred or....
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....ble. To have an alternative to Cable and provide better services to the consumers, the Government of India rolled out the DTH License in the Year 2003 subsequent to which, DTH License was issued to eligible persons including the appellants who are one of such DTH license holder and DTH service provider to the subscribers. In India, DTH service was a recent entrant as compared to cable transmission. It has certain technical advantages over cable operations. DTH is an addressable system and covers the entire country. The authority to issue DTH license vests with the Government of India, Ministry of Information & Broadcasting. (c) Earlier, the Government had legislated the Cable Television Networks (Regulation) Act, 1995 in order to regulate the cable television networks in the country and to protect the interest of the consumers. The need for provision of STBs arose from the statutory requirements brought out by the Government under the said Act, by inserting a new Section 4A of Act of 1995 (supra), which envisaged "Transmission of programmes through addressable system" [popularly referred to as Conditional Access System (CAS)] to be implemented with effect from a specified date. In....
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....Premises Equipment which is necessary for providing DTH service to a subscriber. It may be seen that STB is used as an equipment, being part of CPE, and that whenever the television channels are viewed by a subscriber, the said STB along with antenna are used for receiving and decoding the signals as a part of conditional access system. In other words, the broadcasting of signals by the appellants for viewing television channels are distinct by themselves from the STBs and other equipment. Thus, we conclude that the nature of activity undertaken by the DTH operator in providing STB to a subscriber, is provision of an equipment, which is one-time activity, and it is not a part of DTH service in providing television channels for viewing by the subscriber. (iii) whether provision of STBs by the appellants to the subscribers would amount to rendition of service? On reading of Regulation 10 of the DTH Regulations (supra), it would transpire that a subscriber may or may not pay for his subscription charges. However, as a provider of DTH service, the appellants herein are entitled, even when no broadcasting signals go to the subscriber, to collect lease rental amounts for such pe....
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.... following paragraphs. Revenue strongly relies upon the Hon'ble Supreme Court's Judgment in the case of Idea Mobile Communication Ltd. (supra), wherein it has been held that consideration for SIM Card would be more relevant to service tax and not amount to sale of goods. On reading of the said judgement, it transpires that the Hon'ble Court have proceeded on the basis that the charges for SIM Card were activation charges and the SIM was relevant to service and would not be goods in the manner understood in common parlance for levy of VAT thereon. However, in the present case, the STBs are being transferred for consideration and on the activation charges, installation charges and subscription charges for the broadcasting contents, service tax is being paid by the appellants. Therefore, the ratio of the above judgement relied upon by Revenue cannot be applied to decide the case differently. (e) Further, Revenue also relies upon the order of the Co-ordinate Bench of the Tribunal, in the case of UCN Cable Network P. Ltd. (supra). We find that the identical issue involved in the present case has been dealt with by the Hon'ble Tripura High Court in the case of Bharti Telemedia Ltd....
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....ion of cost of such goods?". The said question was answered affirmatively in favour of the appellant therein, holding that the value of photographic paper being leviable to sales tax under works contract service, by considering it as deemed sale, the said consumables cannot be included in the value of photography service for the purpose of imposition of service tax. Similarly, an identical issue regarding deemed sale vis-à-vis service has also been discussed by the Hon'ble Supreme Court in the case of Safety Retreading Co. (P) Ltd. Vs. Commissioner of C. Ex., Salem - reported in 2017 (48) S.T.R. 97 (S.C.). The relevant paragraph in the said judgement is extracted herein below: "10. The exigibility of the component of the gross turnover of the assessee to service tax in respect of which the assessee had paid taxes under the local Act whereunder it was registered as a Works Contractor, would no longer be in doubt in view of the clear provisions of Section 67 of the Finance Act, 1994, as amended, which deals with the valuation of taxable services for charging service tax and specifically excludes the costs of parts or other material, if any, sold (deemed sale) to the customer....